If you’re having trouble meeting your financial obligations, a Chapter 13 bankruptcy can be a lifesaver, giving you the breathing room you need while allowing you to catch up on unsecured debt. Even student loans, which are quite difficult to discharge, can be effectively managed through a Chapter 13, even though in some cases they can’t be eliminated or permanently reduced.

A Guide to Chapter 13 Bankruptcy for Student Loans

While student loans are unsecured debts, like credit cards or revolving lines of credit, the bankruptcy code sets them aside for special treatment. However, your Chapter 13 petition can temporarily reduce your monthly payments until the bankruptcy is complete, which is usually between three to five years.

While you’re in Chapter 13 bankruptcy, you’ll have to direct all of your disposable income toward your creditors, who will have to accept partial payments. For instance, if your monthly income is $2,500, and all your reasonable expenses, including rent and utilities, comes to $2,000, you’ll have to pay $500 to the trustee, who will distribute those funds among your creditors, regardless of the amount you owe.

If your credit card payments total $400 and your student loans are another $300, you would normally be at least a couple of hundred dollars behind every month. However, in a Chapter 13, the $500 you have available is all you’ll have to pay. When the bankruptcy is over, most of your unsecured debts will have discharged, freeing up resources you can use to stay current on your student loan payments into the future.

If you’re struggling to keep your head above water, Eugene S. Melchionne Attorney at Law in Waterbury, CT, can help you get the financial relief you need. Visit the law firm online to learn more about their background and experience, follow them on Facebook for more insight into the bankruptcy process, or call (203) 757-3437 to learn about the benefits of Chapter 13 bankruptcy today.